Why using blockchain for IoT could be your next competitive advantage
The Internet of Things (IoT) revolutionizes how we do business by connecting people to people, people to devices, and devices to devices. Analysts say the IoT boom is just getting started. The same may be said about blockchain for IoT.
Gartner and IDC estimate the number of installed IoT devices will reach between 20 and 30 billion by 2020, up from more than 15 billion in 2015. The number is expected to quadruple by 2030 to around 125 billion installed IoT devices.
IoT can monitor, automate and optimize processes. It can deliver critical real-time alerts, and give us actionable insights for faster and smarter decision making. IoT already delivers enormous safety, efficiency, visibility and cost-savings benefits — all of which impact the bottom line.
But IoT brings challenges, too. Chief among them: security, privacy, complexity and cost concerns. Today, with enough resources and the right technology, we can control these challenges. Over time, the massive growth of installed IoT devices will make ensuring security across all touch points extremely expensive and complicated and will likely slow down the pace of business across the value chain.
Enter blockchain for IoT.
The potential of blockchain for IoT
Blockchain for IoT enables companies to securely and efficiently grow the scope of their operations, enter new markets and make new partnerships. Businesses that effectively implement blockchain for IoT will be able to:
- Build trust between parties and devices and reduce risks of collusion and tampering
- Optimize ecosystems by facilitating streamlined transactions and processes with suppliers, partners and customers
- Reduce costs by removing overhead associated with middlemen and intermediaries
- Accelerate transactions by reducing settlement time from days to near instantaneous
Use cases of blockchain for IoT
While the use of blockchain for IoT is still limited, there are a number of companies dipping their toes into the pool. Some even are doing proofs of concept to validate the potential benefits. Use cases include:
Freight transportation: An IoT-enabled blockchain can store the temperatures, position, arrival times and status of shipping containers as they move through the system. Indelible blockchain transactions ensure that all parties can trust the data and take action to move the product quickly and efficiently.
Component tracking and compliance: The ability to track the components that go into an aircraft, automobile or other vehicles is critical for both safety and regulatory compliance. IoT data stored in shared blockchain ledgers enables all parties to see component provenance throughout a vehicle’s life.
Logging operational maintenance data: IoT devices track the state of safety of critical machines and their maintenance in your organization. From aircraft engines to elevators, blockchain provides for a tamper-free ledger of operational data and the resulting maintenance.
What steps can you take now?
The potential of using blockchain for IoT is exciting. While the market is still early, it’s not too soon to investigate. So, where should you start?
Assess the best use case and start planning. Think about where IoT comes into play and where it’s important to track transactions along your value chain:
- Look at the transactions between your organization and your distributor, manufacturer, stores, freight company, devices, equipment and more.
- Consider how many technologies, organizations and people are involved across this value chain and where there may be points of weakness.
- Identify additional digital and physical assets you could digitalize; for example, vending machines, elevators, vehicles and conference rooms.
As you begin the planning phase, take an agile approach by breaking your long-term strategy into lots of small projects. As you work to complete these smaller projects, you should continue to assess and refine your strategy along the way.
The good news is that unlike so many other areas of innovation in the digital age, you have time to learn more about blockchain for IoT and investigate its potential value to your business.